An attack on Saudi Arabia that shut 5% of global crude output caused the biggest surge in oil prices since 1991, after U.S. officials blamed Iran and President Donald Trump said Washington was “locked and loaded” to retaliate.
The Iran-aligned Houthi movement that controls Yemen’s capital claimed responsibility for the attack, which damaged the world’s biggest crude oil processing plant. Iran denied blame and said it was ready for “full-fledged war”.
Two sources briefed on the operations of state oil company Saudi Aramco told Reuters it may take months for Saudi oil production to return to normal. Earlier estimates had suggested it could take weeks.
Oil prices surged by as much as 19% before coming off peaks. The intraday jump was the biggest since the 1991 Iraqi invasion of Kuwait that prompted the Gulf War.
Prices eased after Trump announced that he would release U.S. emergency supplies, and producers around the globe said there were enough stocks stored up to make up for the shortfall.
“There is reason to believe that we know the culprit, are locked and loaded depending on verification, but are waiting to hear from the Kingdom as to who they believe was the cause of this attack, and under what terms we would proceed!” Trump said on Twitter on Sunday.
While Iran has denied blame for the attacks, its Yemeni allies have promised more strikes to come. Houthi military spokesman Yahya Sarea said the group carried out Saturday’s pre-dawn attack with drones, including some powered by jet engines.
“We assure the Saudi regime that our long arm can reach any place we choose and at the time of our choosing,” Sarea tweeted. “We warn companies and foreigners against being near the plants that we struck because they are still in our sights and could be hit at any moment.”
U.S. officials say they believe that the attacks came from the opposite direction, possibly from Iran itself rather than Yemen, and may have involved cruise missiles. Wherever the attacks were launched, however, they believe Iran is to blame.
“There’s no doubt that Iran is responsible for this. No matter how you slice it, there’s no escaping it. There’s no other candidate,” a U.S. official said on Sunday on condition of anonymity.
Saudi Arabia and Iran have been enemies for decades and are fighting a number of proxy wars, including in Yemen where Saudi forces have been fighting against the Houthis for four years.
Overall tension in the oil-producing Gulf region has dramatically escalated this year after Trump imposed severe U.S. sanctions on Iran aimed at halting its oil exports altogether.